Weekend Edition: Some Investors Are Making Huge Profits in a Controversial Industry

The U.S. elections didn’t just decide who occupies the White House… They also opened up a potential tidal wave of profits to smart investors.

That’s because seven states voted in favor of legislation that will turbocharge a very specific industry.

We’re talking about companies that specialize in marijuana.

Believe it or not, there are dozens of marijuana businesses trading on public stock exchanges — giving you an easy way to invest in them. And with marijuana now legal in seven more states, many of them are already on the move.

Buy the right companies now, before the big money starts rolling in, and you stand to make six figures or more.

First, however, I want to make a few things clear.

Following Trends for Profits

So why am I, the editor of a technology advisory, talking about marijuana — a plant that folks have cultivated (and smoked) for thousands of years?

A few reasons.

First, some of the companies that will benefit from legalized marijuana do have a technology connection — working on medicines derived from marijuana’s active ingredients or using genetic engineering to make designer marijuana plants.

But beyond that, you should know that successful technology investing isn’t just about identifying companies with fancy new gadgets or novel medical treatments. You need to find companies with innovations that will change the way people see and interact with the world.

Doing that starts with analyzing current trends — gauging what a company’s potential customers are thinking and feeling. Then it’s predicting how the company’s product will affect those thoughts and feelings. In other words, how the product could alter current trends or even create new ones.

So I’m always monitoring societal, political, and economic trends… and over the past several years, it’s become impossible to ignore that marijuana has become a very hot topic in each sphere. I’ve watched legalization gain more traction over the past few decades, reversing the first anti-marijuana laws that started appearing in the early 1900s.

That trend took another major leap forward on November 8, thanks to votes to legalize medical cannabis in Florida, North Dakota, and Arkansas. California, Nevada, Maine, and Massachusetts took it even further, making marijuana legal for recreational use.

These victories will only embolden the legalization movement, so it’s hard to see how cannabis companies won’t be raking in huge profits in the days and weeks ahead. The potential is so great, it would almost be irresponsible of me not to share my findings!

A Brief History of Pot Legalization

In 1970, the medical loophole closed, with the Comprehensive Drug Abuse Prevention and Control Act declaring cannabis a Schedule I narcotic. It meant that, as far as the U.S. government is concerned, marijuana has no accepted medical use and a high potential for abuse.

Since then, activists have worked to reverse that decision. Among other arguments, they cited the fact that marijuana has lower potential for abuse than many other substances.

But it was marijuana’s medical uses that started turning things around. Studies have shown that marijuana can decrease side effects of chemotherapy, such as nausea.

It may also offer health benefits to people suffering from migraines, anorexia, and glaucoma.

Starting in the 1990s, activists led by Dennis Peron pushed California to make marijuana legal for medical purposes. It became a ballot issue in 1996 and passed with 55.6% of the vote. Other states soon passed their own medical marijuana bills.

Then, in 2012, two states — Washington and Colorado — upped the ante, introducing legislation that allowed the recreational use of marijuana. In both states, 55% of the population voted in favor of the law. Marijuana retailers in Colorado started opening in January 2014.

That’s all it took for some people to make a lot of money…

The First Round of Marijuana Millionaires

Despite governments’ tight regulation on marijuana, several marijuana-related companies managed to make it onto major stock markets. And when marijuana became legal in two U.S. states, shares of these trailblazing companies shot up like a rocket.

Consider the case of Abattis Bioceuticals, a Canadian company specializing in “natural health” products, including one containing cannabinoids. It also sold products to help people cultivate marijuana. Before January 1, 2014, shares traded for about 2.5 cents per share. By March 21, it was trading for $2.46 — a gain of 9,740%.

In other words, you could have bought 1,000 shares for just $25… and cashed out with $2,460.

There was also Fusion Pharm, another company specializing in technology that could help marijuana farmers. Its shares went as high as 2,269% after Colorado’s pot retailers opened for business.

The story was repeated in other companies, too, like CV Sciences… Easton Pharmaceuticals… CannaBusiness Group…

They all soared just because a pair of U.S. states legalized marijuana for recreational use.

Now that several more states are about to join the legal marijuana club, I expect history to repeat itself. Shares of some public marijuana companies have already moved higher. But I expect the industry’s biggest growth to start on or around January 1, when the relaxed laws start going into effect.

Now, it’s important to note that these stocks didn’t soar for long. When investors first realized legalized marijuana was a reality, they quickly bid up shares of any stock with a marijuana connection. As the euphoria wore off, they took a closer look at the companies they had bought and regretted buying in so quickly.

Frankly, I think the same thing will happen again.

The Next Round of Marijuana Millionaires

As California, Massachusetts, Maine, Nevada, and the others start enacting the newly passed laws, investors will once again buy any marijuana-related company before its shares get too high. Then, a few months down the road, they’ll take a closer look at what they bought. While there will certainly be a few companies worth holding, many more will be dropped like the junk they are.

It’s still too early to tell which companies will survive that inevitable shakeout, and, of course, a lot depends on when the new laws will go into effect in each state. Everything is far too speculative for us to make official stock recommendations.

Still, we have enough information to make some educated guesses about which companies could see the biggest pops in the weeks ahead… and which ones have the kind of staying power that will keep their prices afloat longer if there’s a sell-off. We plan on keeping a close eye on this handful of firms, and we may recommend buying them after prices have settled down.

But if you don’t mind taking speculative risks, there’s nothing stopping you from buying these “watch list” stocks now. We’ve put together a list of four companies you can start exploring now.

Keep in mind that they’re currently cheap and not heavily traded. That means a lot of people buying these stocks at once could push their prices artificially higher (another reason we’re not officially recommending them yet). So if you decide to invest in them, buy small lots with strict limit orders — an instruction to your broker for the most you wish to pay for the stock shares. And do not invest money you can’t afford to lose.

You may wish to set up a trailing stop loss order with your broker — an instruction to sell if the stocks falls a set percentage off its high. Otherwise, look for signs of a downturn, and sell before shares, too, fall.